Belgium's economic growth is expected to remain steady over the next two years, closely mirroring that of the eurozone, according to the European Commission's spring economic forecast.
The Commission praises Belgium's economy as "resilient". This year, inflation is predicted to bounce back, whilst the already-considerable public deficit will continue to elevate the debt under present policy.
Belgium's growth should remain broadly stable at 1.3% in 2024, which is 0.5 percentage points higher than the eurozone average, before rising to 1.4% in 2025, equivalent to the eurozone average. By comparison, Germany and France are predicted to see growth of 1% and 1.3% respectively.
However, there are warnings regarding inflation. The gradual withdrawal of government measures to limit price increases is expected to drive inflation up to 4% in 2024, before a drop back to 2.3% in 2025, details the Commission.
A long-standing concern, the public deficit is expected to stabilise at 4.4% of GDP this year, before rising to 4.7% in 2025, due to pressure from recurring expenditures such as automatic indexing, ageing costs, interest rates, etc. The public debt is predicted to hold steady at 105% of GDP in 2024, and to increase to 106.6% of GDP in 2025, should policy remain unchanged. Four countries, namely Spain, France, Italy, and Greece, have reported an even higher debt rate.
'Challenging year'
On the European level, after an economic stagnation in 2023, economic growth has been stronger than anticipated early this year. The consistent reduction of inflation paves the way for a slow but steady expansion of activity, states Economic Commissioner Paolo Gentiloni.
"The EU economy significantly recovered in the first quarter of the year. We have turned a corner following a very challenging 2023," comments the Italian official. Deficits are expected to diminish as a result of the withdrawal of almost all energy support measures, but the debt will slightly increase next year emphasizing the need to strengthen public finances whilst protecting investment.
The Commission remarks that its forecasts remain highly uncertain in light of the ongoing wars in Ukraine and the Middle East which continue to affect its surroundings. "Economic degradation risks have increased," it warns.
With the return of fiscal discipline rules, each EU member state must submit its budget plan by 20th September; by 19th June, the Commission will present its country-by-country report. Last year, eleven countries including Belgium exceeded the 3% public deficit and thirteen saw more than 60% public debt compared to their GDP.
"We will appreciate all relevant factors, we cannot prejudge conclusions for any member state," Mr Gentiloni stated. He advised caution against overly restrictive budgetary policies that could negatively impact growth, advocating for balance. "The new fiscal governance rules provide sufficient leeway," he added.
